How To Record Past Due Rent?

ddcanfield

I have set up Quicken to track my rental property and have a question.

How do I record past due rent and utility bills?

Frankx

@ddcanfield,

Okay - thanks for the clarification. I am assuming that your main concern would be making sure that your accounting for these transactions complies with tax law requirements. 

If that is true, then you should record these items in Quicken on what is referred to as the "cash basis of accounting."  On the cash basis it does not matter when the amounts (like rents) were "earned" or when expenses (for example the electricity costs) were "billed" to you, it matters when you actually receive the rent from your tenant and when you actually pay the bills for expenses. 

So, when you receive payments for the rent and also the utilities from tenants and deposit them in the bank, that's when you should enter them in Quicken.  Payments received in January 2020 through December 2020 will be income on your 2020 tax return (that will be filed in 2021). And that same concept applies to expenses - you record them in Quicken when you pay the bills.

Let me know if you have any follow-up questions.

Frankx

Hi ddcanfield,

I just want to clarify your question - when you refer to "record past due rent" - are you asking how you should record that once it is received?  And similarly, with respect to "utility bills" - are these also past due, and are these payments that you receive from tenants, or are they payments that you will make to the utility companies?

Thanks.

ddcanfield

Hi Frankx,

Thanks for responding. To clarify, I have set up the property and the tenant as of January, however the tenant owes me for December and I am not sure how to record the past due rent, the same with a utility bill the tenant owes me. I hope this makes sense.

Frankx

@ddcanfield,

Okay - thanks for the clarification. I am assuming that your main concern would be making sure that your accounting for these transactions complies with tax law requirements. 

If that is true, then you should record these items in Quicken on what is referred to as the "cash basis of accounting."  On the cash basis it does not matter when the amounts (like rents) were "earned" or when expenses (for example the electricity costs) were "billed" to you, it matters when you actually receive the rent from your tenant and when you actually pay the bills for expenses. 

So, when you receive payments for the rent and also the utilities from tenants and deposit them in the bank, that's when you should enter them in Quicken.  Payments received in January 2020 through December 2020 will be income on your 2020 tax return (that will be filed in 2021). And that same concept applies to expenses - you record them in Quicken when you pay the bills.

Let me know if you have any follow-up questions.